SRC-TBR H.B. 1404 77(R)   BILL ANALYSIS


Senate Research Center   H.B. 1404
77R10949 DLF-DBy: Martinez Fischer (Van de Putte)
Business & Commerce
5/11/2001
Engrossed


DIGEST AND PURPOSE 

Credit card companies market life, disability, and unemployment insurance
to consumers by enclosing information in monthly billing statements.  This
insurance covers all or a portion of a cardholder's debt in the event of
the cardholder's death, disability, or involuntary unemployment. A
cardholder authorizes coverage by checking a box on a monthly billing
statement, the monthly premium is then charged to the consumer's credit
card and paid to the insurance company.  This informal application process
may make consumers vulnerable to abuses such as unauthorized coverage or
overcharging.  Current law does not require these insurance companies or
credit card issuers to keep consumer applications or policy information on
file, which may make proving an unauthorized charge difficult.  H.B. 1404
requires providers of credit insurance to retain applications and policy
information for one year after coverage ends and authorizes an insured to
inspect records maintained by insurance companies or credit card issuers.  

RULEMAKING AUTHORITY

Rulemaking authority is expressly delegated the commissioner of insurance
SECTION 1 (Section 6, Article 21.79A, Insurance Code) of this bill.  

SECTION BY SECTION ANALYSIS

C.S.H.B. 1404 amends the Insurance Code to require an insurer or credit
card issuer to maintain complete records of the documents obtained in
connection with a policy or group certificate of specified credit insurance
issued by the insurer or credit card issuer that is marketed in connection
with credit cards.  The bill specifies the information the records must
include, how the records are to be maintained, and the inspection of the
records.  The bill provides that the insurer is responsible for ensuring
compliance with the record retention provisions. 

If a copy of an application for a policy or certificate is not properly
maintained in accordance with records retention provisions, the bill
prohibits a credit card issuer from charging and an insurer from collecting
or accepting any premium or other charge with respect to a policy or
certificate and requires an insurer or credit card issuer to refund to the
insured specified charges plus interest.  The bill provides that these
provisions do not affect an insurer's obligation to pay a claim or issue an
original policy under certain conditions. 

The bill authorizes the commissioner of insurance to adopt rules as
necessary to implement these provisions.  

EFFECTIVE DATE:  September 1, 2001.